Payment for Ecosystem Services: A Comprehensive Global Exploration

Hey there! In my previous post, I have dived into the core concepts and fundamental principles of Payment for Environmental Services (PES). Today, we're taking our understanding to the next level by zooming out and looking at how PES actually works around the world. We'll unpack the different models of PES and break down the key conditions that can make or break their success. I hope you will enjoy this post!

The Three Models of PES

The implementation of PES schemes globally reveals a nuanced landscape of economic, social, and environmental interactions that challenge traditional approaches to environmental protection. Fundamentally, three primary models of PES exist: private, public, and hybrid [1].

In the private model, payment rates emerge through direct negotiations between ecosystem service buyers and providers, carefully tailored to local contextual conditions [2]. Notable examples include Vittel (Nestlé Waters)'s initiative in north-eastern France, where farmers received financial support to implement more aquifer-friendly farming practices, and Ecuador's carbon PES program, which compensated 152 landowners and communities for reforestation efforts undertaken for an electricity company [3, 4].

Public PES models differ significantly, characterized by government-mandated participation or financing through end-user payments and taxpayer contributions [5]. China's Sloping Lands Conversion Program exemplifies this approach, providing monetary compensation to farmers specifically aimed at improving water quality and flood control mechanisms [6].

Hybrid models represent a middle ground, combining public budget allocations with voluntary corporate contributions [6]. The Quito Water Conservation Fund in Ecuador illustrates this approach, drawing funding from a 1% water bill surcharge and corporate contributions from local beer companies [6].

Recent scholarly literature highlights a critical geographical concentration of PES schemes [7]. The majority of these initiatives are located in the Global South, spanning Latin America, Asia, and Africa, and are predominantly government-controlled [7]. The inherent complexity of natural resource management necessitates governmental intervention, yet developing countries frequently encounter significant challenges in implementing large-scale PES programs due to limited financial and administrative capacities [8, 5]. As such, the support from private financing holds significant potential for sustaining PES long-term development [5].

What Makes or Breaks PES?

Scholars have identified four broad categories of conditions influencing PES implementation: biophysical, economic, governance, and social-cultural [9].

The biophysical dimension examines forest areas and ecosystem service values, intimately connected with economic considerations of perceived value and estimated costs [10–12]. These valuations encompass both monetary and non-monetary factors, including governance benefits, price risks, and legal uncertainties. For example, research demonstrates that lower opportunity costs correlate with higher participation levels [13, 14].

As a fundamentally market-driven approach, Payment for Ecosystem Services (PES) remains subjected to broader economic dynamics, market fluctuations, and underlying economic incentive structures. This market-based nature means that ecosystem conservation becomes intimately tied to economic rationalities, where environmental protection must compete with and often align with economic interests [9, 15]. Consequently, the success of PES programs depends not just on environmental goals, but on their ability to create compelling economic value propositions for stakeholders, demonstrating that ecological preservation and economic sustainability can be mutually reinforcing rather than conflicting objectives.

Governance conditions have received extensive scholarly attention. Multiple institutional factors come into play, including legal frameworks, political support, management rules, enforcement mechanisms, monitoring and evaluation systems, transaction procedures, and tenure rights [9, 15, 12]. In particular, strong institutions create favorable implementation conditions, while weak institutions impede efficiency and effectiveness [9]. Tenure clarity also emerges as a critical governance factor. Clear land tenure fosters PES development, reduces transaction costs, and promotes participation [16]. Furthermore, policy design that overlooks context-specific conditions—particularly when establishing compensation rates—can create disincentives for community participation, thereby compromising the effectiveness of conservation initiatives [17].

Social-cultural conditions, while less prominently discussed, remain significant. The viability of PES schemes depends on securing stakeholder engagement and effectively addressing various social dynamics [17]. Factors such as trust, motivation, awareness, willingness, perceptions, communication, and power balances also critically influence implementation success [17, 9, 12]. Moreover, PES is often shaped by power dynamics that influence decision-making, facilitation, and beneficiary selection—a particularly prominent feature in contexts like Vietnam's Payment for Forest Ecosystem Services [5, 18].

The global landscape of PES reflects the complex interplay between economic development, environmental conservation, and social dynamics. In our next post, we'll dive deeper into the real-world achievements and critical shortcomings of Payment for Ecosystem Services. We'll unpack the successes that give us hope and the challenges that remind us of the complexity of environmental conservation.

References

1. Ezzine-de-Blas, D. et al. (2016) ‘Global Patterns in the Implementation of Payments for Environmental Services,’ PLOS ONE, 11(3), p. e0149847. https://doi.org/10.1371/journal.pone.0149847.

2. Sattler, C. and Matzdorf, B. (2013) ‘PES in a Nutshell: From Definitions and Origins to PES in Practice—Approaches, Design Process and Innovative Aspects,’ Ecosystem Services, 6, pp. 2–11.

3. Wunder, S. and Albán, M. (2008) ‘Decentralized Payments for Environmental Services: The Cases of Pimampiro and PROFAFOR in Ecuador,’ Ecological Economics, 65(4), pp. 685–698.

4. Bingham, L.R. (2021) ‘Vittel as a Model Case in PES Discourse: Review and Critical Perspective,’ Ecosystem Services, 48, p. 101247.

5. Thompson, B.S. (2021) ‘Corporate Payments for Ecosystem Services in Theory and Practice: Links to Economics, Business, and Sustainability,’ Sustainability, 13(15), p. 8307.

6. Salzman, J. et al. (2018) ‘The Global Status and Trends of Payments for Ecosystem Services,’ Nature Sustainability, 1(3), pp. 136–144.

7. McElwee, P. et al. (2014) ‘Payments for Environmental Services and Contested Neoliberalisation in Developing Countries: A Case Study from Vietnam,’ Journal of Rural Studies, 36, pp. 423–440.

8. Wang, P. and Wolf, S.A. (2019) ‘A Targeted Approach to Payments for Ecosystem Services,’ Global Ecology and Conservation, 17, p. e00577.

9. Huber-Stearns, H.R. et al. (2017) ‘Social-Ecological Enabling Conditions for Payments for Ecosystem Services,’ Ecology and Society, 22(1).

10. Wunder, S. (2013) ‘When Payments for Environmental Services Will Work for Conservation,’ Conservation Letters, 6(4), pp. 230–237. https://doi.org/10.1111/conl.12034.

11. Rodríguez-Robayo, K.J. and Merino-Perez, L. (2017) ‘Contextualizing Context in the Analysis of Payment for Ecosystem Services,’ Ecosystem Services, 23, pp. 259–267. https://doi.org/10.1016/j.ecoser.2016.12.006.

12. Razzaque, J. (2017) ‘Payments for Ecosystem Services in Sustainable Mangrove Forest Management in Bangladesh,’ Transnational Environmental Law, 6(2), pp. 309–333.

13. Engel, S., Pagiola, S. and Wunder, S. (2008) ‘Designing Payments for Environmental Services in Theory and Practice: An Overview of the Issues,’ Ecological Economics, 65(4), pp. 663–674.

14. Méndez-López, M.E. et al. (2014) ‘Local Participation in Biodiversity Conservation Initiatives: A Comparative Analysis of Different Models in South East Mexico,’ Journal of Environmental Management, 145, pp. 321–329.

15. Pham, T.T. et al. (2014) ‘Local Preferences and Strategies for Effective, Efficient, and Equitable Distribution of PES Revenues in Vietnam: Lessons for REDD+,’ Human Ecology, 42(6), pp. 885–899.

16. Clements, T. et al. (2010) ‘Payments for Biodiversity Conservation in the Context of Weak Institutions: Comparison of Three Programs from Cambodia,’ Ecological Economics, 69(6), pp. 1283–1291.

17. Nguyen, T.Q., Huynh, N.T. and Hsu, W.-K.K. (2021) ‘Estimate the Impact of Payments for Environmental Services on Local Livelihoods and Environment: An Application of Propensity Scores,’ SAGE Open, 11(3), p. 21582440211040774. https://doi.org/10.1177/21582440211040774.

18. Thompson, B.S. (2018) ‘Institutional Challenges for Corporate Participation in Payments for Ecosystem Services (PES): Insights from Southeast Asia,’ Sustainability Science, 13(4), pp. 919–935. https://doi.org/10.1007/s11625-018-0569-y.